IMF Executive Board Completes First Review Under the PRGF Arrangement with Mauritania and Approves US$2.9 Million Disbursement

The Executive Board of the International Monetary Fund (IMF) today completed the first review of Mauritania's economic performance under the three-year Poverty Reduction and Growth Facility (PRGF) arrangement. The completion of the review enables the release of an amount equivalent to SDR 1.93 million (about US$2.9 million). This brings total disbursements under the arrangement to SDR 6.45 million (about US$9.8 million).

The PRGF arrangement was approved on December 18, 2006 in an amount equivalent to SDR 16.1 million (about US$24.5 million) See Press Release 06/288.

"Mauritania's economy continues to perform well despite some difficulties in the nascent oil sector. Sound macroeconomic policies helped keep inflation under control, improve confidence in the domestic currency, and enhance the country's external position. There has been substantial progress in the financial sector area, including the promulgation of key financial sector ordinances and the successful debut of the foreign exchange market.

"The new authorities intend to achieve Mauritania's ambitious poverty-reduction goals through sound macroeconomic management, the promotion of private sector-led development, and good governance.

"In the short term, sound macroeconomic policies will require a close monitoring of the oil revenue outlook, a cautious execution of non-priority spending, and efforts to enhance non-oil revenues. Improved oversight of state-owned enterprises will also be necessary to reduce the risks on the budget.

"Private sector-led growth will require further progress in the financial sector area, with a focus on strengthening supervision, improving the commercial banks' financial position, and developing the foreign exchange market.

"Improved governance is a key element of the public sector reform agenda. The authorities are committed to reforms in this area, including the further strengthening of budget preparation, execution, and control capacity. This is an important condition to help the authorities meet their poverty-reducing spending objectives and work towards attaining the Millennium Development Goals. The authorities' program also envisages the finalization and implementation of the anti-corruption strategy, the further strengthening of the oil revenue management legislation, and the streamlining and modernization of the civil service.

"To ensure external sustainability, the authorities will need to rely on concessional external financing and seek agreements with the creditors that have not yet provided debt relief under the Heavily Indebted Poor Countries (HIPC) initiative," Mr. Portugal said.